Emerge Dynamics Podcast

We’re continuing our conversation about how us business owners can improve as individuals, and today’s theme is that how you spend your time really matters. We’re bringing in two concepts: The Rainmaker’s Dilemma, and the “Value Ladder” from the book “Time Really Is Money: How to Work for $5,000 Per Hour” by Rob Slee.

Rob writes that in addition to the corporate ladder, there’s also a value ladder which is taller than the corporate one and that we ourselves decide how high we want to climb on. As business owners, we often do things (for various reasons) that don’t actually provide value.

Let’s say you have a lawn mowing business, and you’re out there pushing the mower every day. You could be amazing at cutting lawns, but there’s a limit to how much value you create and how much income you receive if you choose to spend your time doing that. There’s nothing wrong with this, and that’s what a lot of people want to do. There is some value being created. However, if you were to instead create a process for how to mow lawns, you have an opportunity to create much more value.

If you step back and look at the things you do on a regular basis, there are probably some things that anybody with a minimal amount of training could do. Spending your time on those types of activities is not going to bring a whole lot of value. The things that you are really good at are the hardest ones to hand off to someone else.

Think of activities that you can train other people to do. It’s easy to knock off some easy tasks in your inbox and to feel good about that, but it’s not a real accomplishment that will bring greater success down the road.

In today’s episode we’re diving into our email inbox. Checking out the inbox is a good indicator of how someone is balancing working on the business versus in the business. By looking into someone’s inbox, you can get a good idea of the activities those individuals are working on throughout the day. That, however, doesn’t indicate productivity.

“A World Without Email” is a leap into the future. Most of the communication between employees, customers, and so on is done through email. The assumption is the faster you can answer an email, the faster the business can run. On the surface, that assumption makes sense. As a result, however, a lot of the business ends up “living” out of an inbox.

Studies show that the average American worker checks their email every 6 minutes. A heavy email user checks their email every minute. This leads to less productivity and more disruption. It can take 5 to 15 minutes to get engaged back into work after a disruption.

This constant disruption disturbs the ability to think deeply. Deep thinking gives us more creativity, better problem solving, and organization. There is a lot of value in being able to think deeply in business and in our personal lives, so we need to find mechanisms to be able to step away from those disruptions.

There are practical solutions. One simple example is setting a time to check your email and sticking to that allotted time. It needs to be understood that not every email is an emergency. By doing this, you can shift your focus from life and business running you, to you running life and business.

Curious to know what helps businesses emerge from their peers? Documenting your processes is key. This requires discipline by looking at the consistent application of processes within your business. You must have full documentation, and then train off of that to systematize the way your processes flow. This is optimal for growth.  

Looking deeper, this relates more to execution, planning, and the journey of the customer, along with how to fit products and services into that process. This all must be done while keeping the same consistency and enthusiasm that originated when the business first began. Keep in mind what creates the optimal customer experience.

For example, when starting a business, an often-made mistake is that when hiring employees, it is assumed they are going to be just like you and deliver the same experience. It doesn’t take long to realize that without training, the same experience cannot be executed. There are processes such as training and documentation that need to be put in place to establish consistency.

Another example of delivering the same experience across the board is a company like McDonald’s. There is a process such as training for something as simple as making a hamburger. Where to place the ketchup, the mustard, the burger, and the bun. This has allowed them to remain consistent.

There are practical aspects of documenting processes and ensuring consistency for the outcome of compliance within the workforce and customer base. This can be done with a notebook, software, whiteboards, etc. The overall key is to just start documenting. Managers, owners, and investors who document their processes are those who become successful in scaling their businesses.  

The customer journey is so important, but even more so during a downturn. There needs to be clarity for the customer about what services and products you’re providing. Having this ensures you’re making that experience as amazing as possible. Alongside that experience, it’s an opportunity to make improvements.

With more insight, you can begin to look at what each customer’s individual needs are. It begins with knowing exactly what that customer is buying and knowing your product to better meet their needs. The customer isn’t necessarily buying the product, but seeking what that product will enable or allow them to do.

For example, someone who sells plumbing supplies doesn’t just sell plumbing supplies. You need to understand you are exchanging those products, but the relationship with those products is different and unique. What else do they need? By engaging with that customer, you open opportunities for that customer’s journey.

The journey begins differently for each customer. It could be word of mouth, a sign they’ve seen, or just calling to see what your hours are. The first impression is key. For example, think about a customer who comes into a store and isn’t acknowledged. That customer may take it as a sign that they aren’t important and so they simply walk out, and you lose that opportunity to begin that customer’s journey.

Human interaction is part of our natural being. It’s important to not assume, and instead to ask questions to distinguish where that customer’s journey needs to go. This allows you to give better solutions and generate more revenue. By guiding the customer journey, showing you care, and giving them a great experience, they are more likely to return as a repeat customer.

Today’s episode in our series about growing through a downturn is about acquisitions. This can be a great way to grow, but great caution must still be exercised. Doing an acquisition into an industry that usually falls deeply during a downturn could be a big problem.

We may or may not be in a recession, but if you’re a business that has been focused on things like strategy and building a strong culture, you’re better equipped to thrive during the hard times than most others in your industry. Acquiring businesses that weren’t as prepared as you can result in you saving so many employees that would otherwise be out of work.

Downturns are probably the worst time to sell a business, but the owners often have no choice. As the buyer, you need to be even more critical of the value you’re placing on the business during these times. You’ll have to think about how you’ll pay, and looking at owner financing can be a very lucrative opportunity. Just because you don’t have the cash in your bank account doesn’t mean you can’t buy a business.

You might run into a situation where the seller is in default with their bank, which means the bank is going to control most of the negotiation. It becomes very important to have an idea of what the lender would accept, along with making sure you’re negotiating with the party that can actually make the final decision.

Even more so in a downturn, it’s critical to work with the seller, build that relationship, and arrive at a reasonable price with them. Being willing to figure out a path together will usually get you to the finish line quicker. The seller note will often become the pivotal tool needed to get the deal done. Listen and we explain why and how to it can benefit both buyer and seller.

We’re continuing our series about continuing to grow during a downtown today. But, actually, sometimes you might not be able to do very much growing. You may have to just focus on sustaining yourself, which means preserving cash. Of course it’s better to grow, but maintaining the status quo before figuring out exactly what you’re going to do is sometimes necessary.

Recent data in February 2023 about credit card debt tells us that people have likely been having trouble for a decent amount of time. With this data in mind, businesses should prepare for spending to slow down. Unlike some consumers, businesses should be more proactive so that they don’t find themselves in a panic.

One thing you can make adjustments to is your accounts receivable by seeing if there’s anything you can do to collect sooner. This is one of many reasons why relationships with your customers are so important. If they only have a limited amount of cash, they’re more likely to pay the people they have the strongest relationships with first.

Accounts payable is an area that many businesses overlook as a way to get cash to get through a short-term challenge. You may be able to delay paying longer than normal. Remember, AR and AP are a balancing act, and you can still be ethical while doing this.

Having genuine dialogue with your vendors and stakeholders about how everyone can still continue doing business is crucial. Just because we’re in difficult times doesn’t mean that your morality should change. Be open and honest so that you can help each other.

In this episode, the series on growing your business through a downturn continues. This topic is very relevant to what’s happening in the current economy. Planning strategically and looking ahead will help you stay proactive so that you don’t just survive economic hardship, but thrive throughout it.

What people need to know is that whether a recession is coming or not, money is still being printed at a high rate. The CPI, or Consumer Price Index, is a widely used measure of inflation. However, the experience most people are having in their lives financially doesn’t seem to match up with the CPI data.

As long as the money supply keeps increasing, prices are probably not coming back down. We can expect this to continue to some degree. It’s also important to acknowledge that the way the CPI is measured has changed greatly over time.

For example, it no longer takes into account the cost of a house. They now only measure rental equivalence, which is going to lead to a much different number. The CPI is also designed to adjust the cost of goods prices down, which makes it seem even more unclear about what the CPI is actually measuring.

Interestingly, there is a group out there still using the old methodology of the Consumer Price Index publishing what is probably more realistic data. The result is a number that is quite a bit higher than the reported 7.5%. In fact, it’s about twice that much. As a business owner, you must recognize that cost increases are going to keep coming. Find other indicators other than the CPI to help guide your strategic decision making.

Curious to look ahead at how an economic downturn might impact your business? Looking ahead is the first step to being prepared. When a downturn starts, the mainstream narrative explains that a recession begins when consumers stop spending, as if all consumers suddenly wake up one day and decide not to spend money.

Looking deeper, there is a reason consumers decide to stop spending less. Further to this, consumers don’t stop spending entirely—there are certain goods they will still need. As a result, businesses are affected differently across industries. The consumer goods industry, especially non-discretionary consumer goods businesses, are typically the least impacted during an economic downturn.

For example, the degree to which a household buys toilet paper does not fluctuate based on market prices. Personal consumption stays relatively stable over time. Knowing this can help you anticipate the best ways to meet your customers’ needs no matter what state the economy is in.

Another example of anticipating this shift and pivoting might be in real estate. Many people who could afford a mortgage may find themselves moving into a rental property. If your customers are usually homeowners, consider how you might be able to serve the rental community. Being able to meet your customers where they are at in an economic downturn supports them and your business.

If you’re an investor wondering where the best place would be to put your money, the same idea applies. Discount stores and pawn shops tend to do well during downturns. As a business owner, it’s time to consider how you might reallocate your resources during a downturn. It’s critical to understand what your business does and how you can match that with the needs of your customers.

Can you continue growing your business through the downturn? It would be great to be able to predict what’s going to happen in the economy next week, next month, and next year. But when it comes doesn’t matter—the fact remains that at some point, there will be a downturn in the economy.

The real-time, first party data shows margin compression at the top of 2023, especially in certain industries. Sales targets are starting to be missed, which is another sign of what could be coming. What can business owners do to manage this situation? You could panic, you could stick your head in the sand, or you could realize some of the most amazing companies were started or flourished in past recessions.

This is the perfect time to reflect on what your customers need and how you can serve them better. You may need to pivot or welcome a new perspective based on the economic strain on your customers. This is an opportunity to innovate, reinvent yourself, and make your community even stronger.

In any given downturn, there is going to be room for nuance. But generally, there are some main factors to consider during these times no matter what. One factor is interest rates, which are still low to moderate according to modern standards. What’s unique about this downturn is the unprecedented period of time of low interest rates and money supply over the last decade.

Consumers and business people who haven’t experienced this before have a knee-jerk reaction of shock. The differing interest rate environments change the perception of costs for consumers. When society begins to push the rate down, human nature takes over and we have a tendency to consume more. More of this topic will be unpacked and explored over the next few episodes.